Guide to Global Payroll Management - 2020 - D-141

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Appendix D--Federal Forms and Instructions

Adjustment exception for Form
1040 or 1040-SR filers. You qualify for
the adjustment exception if you meet
both of the following requirements.
1. Line 7 of the Qualified Dividends
and Capital Gain Tax Worksheet
doesn't exceed:
a. $321,450 if married filing jointly or
qualifying widow(er),
b. $160,725 if married filing
separately,
c. $160,725 if single, or
d. $160,700 if head of household.
2. The amount of your foreign
source net capital gain, plus the amount
of your foreign source qualified
dividends, is less than $20,000. For this
purpose, ignore any capital gain
distributions or qualified dividends you
elected to include on Form 4952,
line 4g.
See special rules if you are subject to
the alternative minimum tax.

Adjustment exception for Form
1040-NR filers. You qualify for the
adjustment exception if you meet both
of the following requirements.
1. Line 5 of the Qualified Dividends
and Capital Gain Tax Worksheet
doesn't exceed:
a. $321,450 if you checked filing
status box 6,
b. $160,725 if you checked filing
status box 5, or
c. $160,725 if you checked filing
status box 2.
2. The amount of your foreign
source net capital gain, plus the amount
of your foreign source qualified
dividends, is less than $20,000.
See special rules if you are subject to
the alternative minimum tax.

Your foreign source net capital

TIP gain is the excess of your

foreign source net long-term
capital gain over your foreign source net
short-term capital loss.
Completing the Worksheet for
Line 18. If you do need to complete the
Worksheet for Line 18, do the following.

Lines 2 through 5. Skip these lines.
Line 6. Enter the amount from:

* Line 22 of the Qualified Dividends

and Capital Gain Tax Worksheet in the
Form 1040 or 1040-SR instructions, or
* Line 20 of the Qualified Dividends
and Capital Gain Tax Worksheet in the
Form 1040-NR instructions.

Line 8. Enter the amount from:

* Line 19 of the Qualified Dividends

and Capital Gain Tax Worksheet in the
Form 1040 or 1040-SR instructions, or
* Line 17 of the Qualified Dividends
and Capital Gain Tax Worksheet in the
Form 1040-NR instructions.
Line 10. Enter the amount from:

* Line 11 of the Qualified Dividends

and Capital Gain Tax Worksheet in the
Form 1040 or 1040-SR instructions, or
* Line 9 of the Qualified Dividends and
Capital Gain Tax Worksheet in the Form
1040-NR instructions.

Your foreign source net capital

TIP gain is the excess of your

foreign source net long-term
capital gain over your foreign source net
short-term capital loss.
If you aren't required to complete the
Worksheet for Line 18 or you qualify for
the adjustment exception and elect not
to adjust your qualified dividends and
capital gains, enter on line 18 of Form
1116 the estate's or trust's taxable
income without the deduction for its
exemption.

Complete all other lines as instructed
on the worksheet.

Completing the Worksheet for
Line 18. If you do need to complete the
Worksheet for Line 18, do the following.

Estates and Trusts That
Completed a Qualified Dividends
Tax Worksheet or Schedule D

Line 6. Enter the amount from
line 18 of the Qualified Dividends Tax
Worksheet or line 40 of Schedule D.

If you completed the Qualified
Dividends Tax Worksheet in the
Instructions for Form 1041 or you
completed Part V of Schedule D (Form
1041), you must use the Worksheet for
Line 18 to figure the amount to enter on
line 18 if:
1. You figured your tax using the
Qualified Dividends Tax Worksheet,
line 5 of that worksheet is greater than
zero, and line 21 of that worksheet is
less than line 22; or
2. You figured your tax using Part V
of Schedule D (Form 1041), line 27 of
Schedule D is greater than zero, and
line 43 of Schedule D is less than
line 44.

Adjustment exception. If you qualify
for the adjustment exception, you can
elect not to adjust your qualified
dividends and capital gains. You make
this election by not completing the
Worksheet for Line 18. You must make
this election if you have any foreign
qualified dividends or foreign capital
gains (or losses) and you chose not to
make any adjustments to those
amounts when you completed lines 1a
and 5. You can't make this election if
you have any foreign qualified dividends
or foreign capital gains (or losses) and
you made adjustments to those
amounts when you completed lines 1a
and 5. In this case, complete the
Worksheet for Line 18. See section
904(b) and the regulations issued under
that Code section to determine if you
qualify for the adjustment exception.

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Lines 2 through 5. Skip these lines.

Line 8. Enter the amount from
line 14 of the Qualified Dividends Tax
Worksheet or line 36 of Schedule D.
Line 10. Enter the amount from
line 8 of the Qualified Dividends Tax
Worksheet or line 30 of Schedule D.

Complete all other lines as instructed
on the worksheet.

Taxpayers Who Completed the
Schedule D Tax Worksheet

If you figured your tax using the
Schedule D Tax Worksheet (in the
Schedule D (Form 1040 or 1040-SR)
instructions or in the Schedule D (Form
1041) instructions), you may have to
use the Worksheet for Line 18 to figure
the amount of tax to enter on line 18 of
Form 1116.

Form 1040 or 1040-SR or 1040-NR
filers. You must use the Worksheet for
Line 18 to figure the amount of tax to
enter on line 18 of Form 1116 if:
* Line 18 of the Schedule D Tax
Worksheet is greater than zero, and
* Line 45 of the Schedule D Tax
Worksheet is less than line 46.
Form 1041 filers. You must use the
Worksheet for Line 18 to figure the
amount of tax to enter on line 18 of
Form 1116 if:
* Line 17a of the Schedule D Tax
Worksheet is greater than zero, and
* Line 42 of the Schedule D Tax
Worksheet is less than line 43.

D-141

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